Pub Date : 2025-08-01Epub Date: 2025-04-26DOI: 10.1016/j.jcae.2025.100472
Ahmed Bouteska , Taimur Sharif , Mohammad Zoynul Abedin
This paper investigates the influence of the anchoring effects on management earnings forecasting (MF) process among the US firms using the voluntary disclosures of MFs during the period 2015–2022. The results show evidence that the MFs’ valuation of the present period is influenced by the internal and external anchoring effects, reflected by firms’ previous earnings forecasts and the earnings forecasts from their industry counterparts, respectively. Furthermore, we highlight that stronger anchoring effects deteriorate the accuracy of the MF and improve the market reaction to the issued forecasts. Given these findings, we suggest that the informational content of the anchor heuristic in MF is affected in the stock prices. Overall, our study complement the behavioral finance literature and warn users about misleading or unreliable information for anchor heuristic in MF when it comes to make investment decisions.
The outcomes of this paper provide useful insights for practitioners, policymakers and to the regulatory authorities.
{"title":"Nexus between the anchoring effect and management earnings forecasts: An investigation of the listed firms in the US stock market","authors":"Ahmed Bouteska , Taimur Sharif , Mohammad Zoynul Abedin","doi":"10.1016/j.jcae.2025.100472","DOIUrl":"10.1016/j.jcae.2025.100472","url":null,"abstract":"<div><div>This paper investigates the influence of the anchoring effects on management earnings forecasting (MF) process among the US firms using the voluntary disclosures of MFs during the period 2015–2022. The results show evidence that the MFs’ valuation of the present period is influenced by the internal and external anchoring effects, reflected by firms’ previous earnings forecasts and the earnings forecasts from their industry counterparts, respectively. Furthermore, we highlight that stronger anchoring effects deteriorate the accuracy of the MF and improve the market reaction to the issued forecasts. Given these findings, we suggest that the informational content of the anchor heuristic in MF is affected in the stock prices. Overall, our study complement the behavioral finance literature and warn users about misleading or unreliable information for anchor heuristic in MF when it comes to make investment decisions.</div><div>The outcomes of this paper provide useful insights for practitioners, policymakers and to the regulatory authorities.</div></div>","PeriodicalId":46693,"journal":{"name":"Journal of Contemporary Accounting & Economics","volume":"21 2","pages":"Article 100472"},"PeriodicalIF":2.9,"publicationDate":"2025-08-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"143881846","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":3,"RegionCategory":"管理学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Pub Date : 2025-08-01Epub Date: 2025-04-24DOI: 10.1016/j.jcae.2025.100471
Lei Zhao
This paper investigates whether and how redacting value-relevant proprietary information from material agreements in initial public offerings (IPO) affects financial analysts’ weighting of private and public information. To the extent that redaction affects the firm information environment, I find that analysts place greater weight on private information for redacting IPO firms. This result prevails particularly among analysts who rely more on private information. Further evidence reveals that analysts’ increased reliance on private information stems from cognitive biases and incentives. Moreover, I ascertain that analysts’ heightened emphasis on private information increases idiosyncratic risk. These findings shed light on the role of firm information environment in analysts’ decision-making processes, which is of potential interest to regulators seeking to understand the consequences of redacting proprietary information in IPO filings.
{"title":"Redacted disclosure and analysts’ weighting of information","authors":"Lei Zhao","doi":"10.1016/j.jcae.2025.100471","DOIUrl":"10.1016/j.jcae.2025.100471","url":null,"abstract":"<div><div>This paper investigates whether and how redacting value-relevant proprietary information from material agreements in initial public offerings (IPO) affects financial analysts’ weighting of private and public information. To the extent that redaction affects the firm information environment, I find that analysts place greater weight on private information for redacting IPO firms. This result prevails particularly among analysts who rely more on private information. Further evidence reveals that analysts’ increased reliance on private information stems from cognitive biases and incentives. Moreover, I ascertain that analysts’ heightened emphasis on private information increases idiosyncratic risk. These findings shed light on the role of firm information environment in analysts’ decision-making processes, which is of potential interest to regulators seeking to understand the consequences of redacting proprietary information in IPO filings.</div></div>","PeriodicalId":46693,"journal":{"name":"Journal of Contemporary Accounting & Economics","volume":"21 2","pages":"Article 100471"},"PeriodicalIF":2.9,"publicationDate":"2025-08-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"143895026","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":3,"RegionCategory":"管理学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Pub Date : 2025-04-01Epub Date: 2024-12-24DOI: 10.1016/j.jcae.2024.100453
Silver Chung , Daniel Sejun Hwang
This study investigates the impact of directors’ experiences with accounting enforcement on financial reporting quality (FRQ). While firms often regard real-life experiences as a crucial factor in their hiring decisions, the actual impact of directors’ experiences on corporate decisions, particularly financial reporting decisions remains unclear. Using a difference-in-differences method, we find significant changes in a firm’s FRQ when its director experiences SEC enforcement at another firm where she serves as a director. More specifically, we find that discretionary accruals and restatement likelihood decrease while real activities manipulation increases following a director’s Accounting and Auditing Enforcement Releases (AAER) experience. Additionally, such changes are concentrated among subsamples where AAERs allege fraud or GAAP violations, or the director serves on the audit committee at the perpetrating company. Collectively, these findings show that directors’ experiences make differences in related corporate decision-making and SEC enforcement actions have disciplinary effects beyond the firms that directly face charges.
{"title":"Seeing is believing: Director accounting enforcement experience and financial reporting quality","authors":"Silver Chung , Daniel Sejun Hwang","doi":"10.1016/j.jcae.2024.100453","DOIUrl":"10.1016/j.jcae.2024.100453","url":null,"abstract":"<div><div>This study investigates the impact of directors’ experiences with accounting enforcement on financial reporting quality (FRQ). While firms often regard real-life experiences as a crucial factor in their hiring decisions, the actual impact of directors’ experiences on corporate decisions, particularly financial reporting decisions remains unclear. Using a difference-in-differences method, we find significant changes in a firm’s FRQ when its director experiences SEC enforcement at another firm where she serves as a director. More specifically, we find that discretionary accruals and restatement likelihood decrease while real activities manipulation increases following a director’s Accounting and Auditing Enforcement Releases (AAER) experience. Additionally, such changes are concentrated among subsamples where AAERs allege fraud or GAAP violations, or the director serves on the audit committee at the perpetrating company. Collectively, these findings show that directors’ experiences make differences in related corporate decision-making and SEC enforcement actions have disciplinary effects beyond the firms that directly face charges.</div></div>","PeriodicalId":46693,"journal":{"name":"Journal of Contemporary Accounting & Economics","volume":"21 1","pages":"Article 100453"},"PeriodicalIF":2.9,"publicationDate":"2025-04-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"143160674","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":3,"RegionCategory":"管理学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Pub Date : 2025-04-01Epub Date: 2025-01-10DOI: 10.1016/j.jcae.2025.100454
Suyan Yan, Chang Tong, Qiliang Liu
Based on firm-level data from 2007 to 2020, this study examines the influence of housing prices on labor cost stickiness. The results show that housing prices strengthen firms’ labor cost stickiness. The strengthening effect is particularly pronounced in high-tech industries and during periods of high economic policy uncertainty. Moreover, as the observation period extends, the impact of housing prices on labor cost stickiness diminishes. Further analysis reveals that housing prices have a reinforcing effect on stickiness in terms of employee numbers, with no significant impact on per capita remuneration stickiness. This study indicates that a company will need to allocate additional resources toward investment in machinery and equipment to address the labor cost stickiness stemming from the housing price surge.
{"title":"Housing prices and labor cost stickiness: Evidence from China","authors":"Suyan Yan, Chang Tong, Qiliang Liu","doi":"10.1016/j.jcae.2025.100454","DOIUrl":"10.1016/j.jcae.2025.100454","url":null,"abstract":"<div><div>Based on firm-level data from 2007 to 2020, this study examines the influence of housing prices on labor cost stickiness. The results show that housing prices strengthen firms’ labor cost stickiness. The strengthening effect is particularly pronounced in high-tech industries and during periods of high economic policy uncertainty. Moreover, as the observation period extends, the impact of housing prices on labor cost stickiness diminishes. Further analysis reveals that housing prices have a reinforcing effect on stickiness in terms of employee numbers, with no significant impact on per capita remuneration stickiness. This study indicates that a company will need to allocate additional resources toward investment in machinery and equipment to address the labor cost stickiness stemming from the housing price surge.</div></div>","PeriodicalId":46693,"journal":{"name":"Journal of Contemporary Accounting & Economics","volume":"21 1","pages":"Article 100454"},"PeriodicalIF":2.9,"publicationDate":"2025-04-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"143160677","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":3,"RegionCategory":"管理学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Pub Date : 2025-04-01Epub Date: 2024-11-26DOI: 10.1016/j.jcae.2024.100450
Jing Zhou , Lili Jiu , Oupin Tang , Po-Hsiang Yu
This study examines the effect of corporate targeted poverty alleviation (TPA) activities endorsed by Chinese governments on audit outcomes. We find that firms engaging in TPA activities are less likely to receive modified audit opinions (MAOs) relative to those without TPA activities and more TPA investments induce less MAO issuance, documenting an unintentional beneficial consequence of TPA. These findings are robust to a battery of sensitivity tests, including addressing endogeneity issues and ruling out the alternative explanation. Our cross-sectional results show that the negative relation between TPA and MAOs is more significant for firms audited by non-industry specialists and short-tenure auditors, non-state-owned enterprises (non-SOEs), and labor-intensive firms. We perform the mediation analyses and identify three potential channels- improved operating performance, enhanced information disclosure quality, and elevated reputation- through which TPA engagements influence the likelihood of receiving MAOs. Moreover, we find industrial development TPA has a more pronounced effect on audit outcomes due to its positive impact on firms’ business operations. Overall, our research documents an unintended consequence of firms’ TPA initiatives in mitigating audit risk. As a vital facet of policy-oriented CSR, TPA engagements exhibit unique characteristics compared to other CSR perspectives. Given its economic relevance and political features, our study contributes to this stream of research and offers implications for TPA initiatives.
{"title":"The unintended consequences of targeted poverty alleviation: Evidence from China","authors":"Jing Zhou , Lili Jiu , Oupin Tang , Po-Hsiang Yu","doi":"10.1016/j.jcae.2024.100450","DOIUrl":"10.1016/j.jcae.2024.100450","url":null,"abstract":"<div><div>This study examines the effect of corporate targeted poverty alleviation (TPA) activities endorsed by Chinese governments on audit outcomes. We find that firms engaging in TPA activities are less likely to receive modified audit opinions (MAOs) relative to those without TPA activities and more TPA investments induce less MAO issuance, documenting an unintentional beneficial consequence of TPA. These findings are robust to a battery of sensitivity tests, including addressing endogeneity issues and ruling out the alternative explanation. Our cross-sectional results show that the negative relation between TPA and MAOs is more significant for firms audited by non-industry specialists and short-tenure auditors, non-state-owned enterprises (non-SOEs), and labor-intensive firms. We perform the mediation analyses and identify three potential channels- improved operating performance, enhanced information disclosure quality, and elevated reputation- through which TPA engagements influence the likelihood of receiving MAOs. Moreover, we find industrial development TPA has a more pronounced effect on audit outcomes due to its positive impact on firms’ business operations. Overall, our research documents an unintended consequence of firms’ TPA initiatives in mitigating audit risk. As a vital facet of policy-oriented CSR, TPA engagements exhibit unique characteristics compared to other CSR perspectives. Given its economic relevance and political features, our study contributes to this stream of research and offers implications for TPA initiatives.</div></div>","PeriodicalId":46693,"journal":{"name":"Journal of Contemporary Accounting & Economics","volume":"21 1","pages":"Article 100450"},"PeriodicalIF":2.9,"publicationDate":"2025-04-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"143160679","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":3,"RegionCategory":"管理学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Pub Date : 2025-04-01Epub Date: 2025-01-27DOI: 10.1016/j.jcae.2025.100455
Shijun Guo , Fang Hu
Focusing on the Industry Information Disclosure Guides (IIDGs) in China’s stock markets, we investigate the impact of firm-specific industry information disclosure on stock price synchronicity under proactive public enforcement. Employing a difference-in-differences analysis around industry-targeted events, we find a significant reduction in stock price synchronicity among companies in focus sectors compared to those in non-focus sectors following the introduction of industry-specific disclosure regulations. This reduction is distinguishing industry-level from market-level synchronicity and spilling over to non-regulated industries through manager learning channel, emphasizing the unique information features of IIDGs at the industry level. Additional tests demonstrate the heightened significance of IIDGs in poor information environment, particularly for companies with opaque financial reporting, with limited private oversight and operating in less competitive markets. Our findings provide valuable insights into the interplay between disclosure mechanisms and information environment in emerging markets.
{"title":"Catalyzing transparency: Proactive enforcement of information disclosure and its impact on stock price synchronicity","authors":"Shijun Guo , Fang Hu","doi":"10.1016/j.jcae.2025.100455","DOIUrl":"10.1016/j.jcae.2025.100455","url":null,"abstract":"<div><div>Focusing on the Industry Information Disclosure Guides (IIDGs) in China’s stock markets, we investigate the impact of firm-specific industry information disclosure on stock price synchronicity under proactive public enforcement. Employing a difference-in-differences analysis around industry-targeted events, we find a significant reduction in stock price synchronicity among companies in focus sectors compared to those in non-focus sectors following the introduction of industry-specific disclosure regulations. This reduction is distinguishing industry-level from market-level synchronicity and spilling over to non-regulated industries through manager learning channel, emphasizing the unique information features of IIDGs at the industry level. Additional tests demonstrate the heightened significance of IIDGs in poor information environment, particularly for companies with opaque financial reporting, with limited private oversight and operating in less competitive markets. Our findings provide valuable insights into the interplay between disclosure mechanisms and information environment in emerging markets.</div></div>","PeriodicalId":46693,"journal":{"name":"Journal of Contemporary Accounting & Economics","volume":"21 1","pages":"Article 100455"},"PeriodicalIF":2.9,"publicationDate":"2025-04-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"143160678","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":3,"RegionCategory":"管理学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Pub Date : 2025-04-01Epub Date: 2025-02-04DOI: 10.1016/j.jcae.2025.100456
Qingyuan Li , Albert Tsang , Qiong Wu , Xi Xiong
We examine the effect of environmental, social, and governance (ESG) information provided by rating agencies on investors’ reactions to earnings news. Based on ESG ratings provided by three major rating agencies, we present evidence that firms’ earnings response coefficients (ERCs) are positively correlated with the initiation of coverage, intensity of coverage, and rating dispersion of ESG rating agencies. Our evidence further suggests that the positive effect of ESG information on ERCs is more pronounced for firms that operate within a weaker information environment. In addition, ESG rating agencies tend to play a more important role in strengthening the stock market reaction to positive earnings news than that to negative earnings news. We also document that the main effects are stronger for firms that have higher-quality ESG ratings and are covered by ESG rating agencies facing more intense competition. Collectively, our results support the view that the ESG information made available by ESG rating agencies significantly enhances the stock market reaction to earnings news by aiding investors’ assessment of firms’ future financial performance and earnings sustainability.
{"title":"ESG rating agencies and investors’ reactions to earnings news","authors":"Qingyuan Li , Albert Tsang , Qiong Wu , Xi Xiong","doi":"10.1016/j.jcae.2025.100456","DOIUrl":"10.1016/j.jcae.2025.100456","url":null,"abstract":"<div><div>We examine the effect of environmental, social, and governance (ESG) information provided by rating agencies on investors’ reactions to earnings news. Based on ESG ratings provided by three major rating agencies, we present evidence that firms’ earnings response coefficients (ERCs) are positively correlated with the initiation of coverage, intensity of coverage, and rating dispersion of ESG rating agencies. Our evidence further suggests that the positive effect of ESG information on ERCs is more pronounced for firms that operate within a weaker information environment. In addition, ESG rating agencies tend to play a more important role in strengthening the stock market reaction to positive earnings news than that to negative earnings news. We also document that the main effects are stronger for firms that have higher-quality ESG ratings and are covered by ESG rating agencies facing more intense competition. Collectively, our results support the view that the ESG information made available by ESG rating agencies significantly enhances the stock market reaction to earnings news by aiding investors’ assessment of firms’ future financial performance and earnings sustainability.</div></div>","PeriodicalId":46693,"journal":{"name":"Journal of Contemporary Accounting & Economics","volume":"21 1","pages":"Article 100456"},"PeriodicalIF":2.9,"publicationDate":"2025-04-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"143349307","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":3,"RegionCategory":"管理学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Pub Date : 2025-04-01Epub Date: 2024-12-20DOI: 10.1016/j.jcae.2024.100452
Pengcheng Zhang , Jiayin Qi
This study empirically investigates the impact of carbon emissions trading on corporate financing constraints using a difference-in-differences model. By compiling lists of emission-controlled enterprises from each pilot carbon market, this study demonstrates that carbon emissions trading significantly increases financing constraints for these enterprises. However, no significant regional or sectoral spillover effects are observed. The results of the mechanism testing show that carbon emissions trading diminishes enterprise performance in the stock market and exerts adverse effects on the scale of corporate bank borrowing and the debt maturity structure. Further research reveals that good corporate governance and better information quality can inhibit the adverse effects of carbon emissions trading. This mechanism reduces firms’ investment expenditures, but increases their investments in research and development and financial asset allocation. Notably, despite financing constraints being detrimental to innovation, carbon emissions trading significantly enhances both the level and quality of innovation in firms. These findings underscore the complex effects of carbon emissions trading on corporate financing constraints and highlight the intricate nature of environmental policies at the microeconomic level.
{"title":"Carbon emission regulation and corporate financing constraints: A quasi-natural experiment based on China’s carbon emissions trading mechanism","authors":"Pengcheng Zhang , Jiayin Qi","doi":"10.1016/j.jcae.2024.100452","DOIUrl":"10.1016/j.jcae.2024.100452","url":null,"abstract":"<div><div>This study empirically investigates the impact of carbon emissions trading on corporate financing constraints using a difference-in-differences model. By compiling lists of emission-controlled enterprises from each pilot carbon market, this study demonstrates that carbon emissions trading significantly increases financing constraints for these enterprises. However, no significant regional or sectoral spillover effects are observed. The results of the mechanism testing show that carbon emissions trading diminishes enterprise performance in the stock market and exerts adverse effects on the scale of corporate bank borrowing and the debt maturity structure. Further research reveals that good corporate governance and better information quality can inhibit the adverse effects of carbon emissions trading. This mechanism reduces firms’ investment expenditures, but increases their investments in research and development and financial asset allocation. Notably, despite financing constraints being detrimental to innovation, carbon emissions trading significantly enhances both the level and quality of innovation in firms. These findings underscore the complex effects of carbon emissions trading on corporate financing constraints and highlight the intricate nature of environmental policies at the microeconomic level.</div></div>","PeriodicalId":46693,"journal":{"name":"Journal of Contemporary Accounting & Economics","volume":"21 1","pages":"Article 100452"},"PeriodicalIF":2.9,"publicationDate":"2025-04-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"143160697","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":3,"RegionCategory":"管理学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Pub Date : 2025-04-01Epub Date: 2024-12-19DOI: 10.1016/j.jcae.2024.100451
Yaqian Wu , Jiyuan Li
We investigate the impact of air pollution on audit process and audit outcomes using unique data from the Chinese capital market between 2013 and 2020. We find that auditors exert less effort in client firms located in cities with severe air pollution, leading to lower audit quality represented by a lower probability of and fewer audit adjustments. The cross-sectional analysis shows that auditors from Big 4 audit firms can mitigate the effect of air pollution on audit effort and audit quality. We also draw some interesting conclusions about the effect of auditors’ perceptions of air pollution variation in both spatial and time dimensions, and the impact of COVID-19. Our findings still hold in several robustness checks such as using alternative proxies, controlling for more fixed effects, considering mutual selection issues, employing regression discontinuity design, utilizing instrument variables method, and conducting placebo tests. Our study contributes to the emerging literature on behavioral finance by extending the research into ambient air pollution to the auditing context, provides new insights into the determinants of audit effort and audit quality, and has some implications for regulators.
{"title":"Does air pollution matter for audit process and audit outcomes? Evidence from China","authors":"Yaqian Wu , Jiyuan Li","doi":"10.1016/j.jcae.2024.100451","DOIUrl":"10.1016/j.jcae.2024.100451","url":null,"abstract":"<div><div>We investigate the impact of air pollution on audit process and audit outcomes using unique data from the Chinese capital market between 2013 and 2020. We find that auditors exert less effort in client firms located in cities with severe air pollution, leading to lower audit quality represented by a lower probability of and fewer audit adjustments. The cross-sectional analysis shows that auditors from Big 4 audit firms can mitigate the effect of air pollution on audit effort and audit quality. We also draw some interesting conclusions about the effect of auditors’ perceptions of air pollution variation in both spatial and time dimensions, and the impact of COVID-19. Our findings still hold in several robustness checks such as using alternative proxies, controlling for more fixed effects, considering mutual selection issues, employing regression discontinuity design, utilizing instrument variables method, and conducting placebo tests. Our study contributes to the emerging literature on behavioral finance by extending the research into ambient air pollution to the auditing context, provides new insights into the determinants of audit effort and audit quality, and has some implications for regulators.</div></div>","PeriodicalId":46693,"journal":{"name":"Journal of Contemporary Accounting & Economics","volume":"21 1","pages":"Article 100451"},"PeriodicalIF":2.9,"publicationDate":"2025-04-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"143160676","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":3,"RegionCategory":"管理学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Pub Date : 2024-12-01Epub Date: 2024-10-18DOI: 10.1016/j.jcae.2024.100443
Wenxuan Huang , Weidong Xu , Donghui Li , Jiancheng (Duncan) Liu
Employing a panel sample of 5,090 firm-years from 981 UK firms during the period from 2010 to 2016, we investigate the impact of the implementation of expanded auditor’s reports (EARs) on corporate voluntary disclosure. We find that the likelihood and frequency of voluntary disclosure significantly decrease after the implementation of EARs. In addition, the total number of risks of material misstatement (RMMs) has no impact on voluntary disclosure after the implementation of EARs, while certain RMMs categories (i.e., entity rather than account risks, and firm-specific rather than industry-level risks) display a more pronounced impact on corporate voluntary disclosure. In further analysis, we find that the mandatory adoption of EARs increases the proportion of long-term forecasts, riches the content of voluntary disclosure, and elicits a more positive market response to the announcement of voluntary disclosure. Cross-sectional analyses show that the impact of the implementation of EARs on voluntary disclosure can be magnified by a higher level of media coverage, especially breaking news coverage. Our results remain valid after considering various robustness tests and selection bias concerns.
{"title":"Expanded auditor’s reports and voluntary disclosure","authors":"Wenxuan Huang , Weidong Xu , Donghui Li , Jiancheng (Duncan) Liu","doi":"10.1016/j.jcae.2024.100443","DOIUrl":"10.1016/j.jcae.2024.100443","url":null,"abstract":"<div><div>Employing a panel sample of 5,090 firm-years from 981 UK firms during the period from 2010 to 2016, we investigate the impact of the implementation of expanded auditor’s reports (EARs) on corporate voluntary disclosure. We find that the likelihood and frequency of voluntary disclosure significantly decrease after the implementation of EARs. In addition, the <em>total</em> number of risks of material misstatement (RMMs) has no impact on voluntary disclosure after the implementation of EARs, while certain RMMs categories (i.e., entity rather than account risks, and firm-specific rather than industry-level risks) display a more pronounced impact on corporate voluntary disclosure. In further analysis, we find that the mandatory adoption of EARs increases the proportion of long-term forecasts, riches the content of voluntary disclosure, and elicits a more positive market response to the announcement of voluntary disclosure. Cross-sectional analyses show that the impact of the implementation of EARs on voluntary disclosure can be magnified by a higher level of media coverage, especially breaking news coverage. Our results remain valid after considering various robustness tests and selection bias concerns.</div></div>","PeriodicalId":46693,"journal":{"name":"Journal of Contemporary Accounting & Economics","volume":"20 3","pages":"Article 100443"},"PeriodicalIF":2.9,"publicationDate":"2024-12-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"142533490","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":3,"RegionCategory":"管理学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
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